They've never really bothered me that much, standing charges for gas and electric, I guess because I've never had trouble paying the bills and because my utility bills have always been a relatively small part of my outgoings.
However a woman I worked with recently detested them, she had a good old whinge about them on more than one occasion because of the sheer principle of them.
And you know what, she has a point!
Standing charges (allegedly) cover the costs of maintaining the energy supply, regardless of usage and they amount to around £300 per household on average.
And they are effectively money for nothing.
Hence why I think the fact that OFGEM are making a move to get energy companies to offer a non-standing charge tariff to customers as standard makes sense.
Under the new plan, energy suppliers would offer two price-capped tariffs:
- With standing charges (fixed daily fees).
- Without standing charges, with higher costs per unit of energy used.
Customers would get to choose between the two.
A lot of people are against Standing Charges
Ofgem’s consultation on standing charges received 30,000 responses, most of them negative. Most from single-person households who are disproportionately affected by them.
I guess second home owners would also be against them, given that second homes would likely have energy costs lowered without them.
The downsides of removing standing charges.
This may raise costs for high-energy users, such as people with disabilities who rely on medical equipment.
There's also the fact that some people may lack the capacity to be able to make an informed choice.
Something needs to be done....
Households owe a staggering £3.8 bn debt to energy companies, a figure which has doubled in the last two years following those recent spikes in energy prices.
And unsurprisingly most of this debt is owed by the poorest households.
But is removing standing charges the right move....?
I'm not so sure, standing charges give energy companies a kind of base-income, a level of certainty, and in a competitive system, the remainder after service charges should be lower per unit of energy than if we didn't have them.
Personally my own standing charges are so low I don't notice them.
And I can't see how a two tariff system is going to make things cheaper for those on low incomes. You have to be using so little energy as it stands for this to be the case...?!?
This just seems like another wishy washy change for the sake of change policy which probably won't make that much difference at all!
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